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No Corporate Welfare for Telecom

While it’s commendable that John Key wants everybody to have access to broadband, his proposed method of going about it leaves a lot to be desired. If spending $1.5 billion of taxpayers’ money on it is his definition of a public private partnership, we’d love to see his definition of a subsidy for Telecom.

What John Key is proposing is nothing more than corporate welfare on a massive scale, which is ironic indeed from a party that for years has mined a rich electoral vein of beneficiary bashing. Well, here’s one very big bludger that richly deserves bashing.

Why should the long suffering New Zealand public pay for the manifest shortcomings of this recidivist transnational corporation? The corporatisation and sale overseas of Telecom is still the biggest and worst example of privatisation of a State asset. Under its foreign owners, Telecom has creamed umpteen billions in profits, considerably more than the $1.5 billion that it reckons it can’t afford to complete the broadband rollout. And the vast majority of those profits have been paid out as dividends to its shareholders (up to 98 cents in the dollar at one stage), not reinvested into its infrastructure.

Telecom won the 2007 Roger Award for the Worst Transnational Corporation Operating in Aotearoa/New Zealand (it’s the only transnational to have been a finalist in every annual Roger Award since the start, in 1997) and one of the major reasons the judges gave it this most coveted of prizes was because of its flagrant lack of reinvestment. The full Judges’ Report can be read online athttp://canterbury.cyberplace.co.nz/community/CAFCA/publications/Roger/Roger2007.pdf The Report includes a very detailed and fascinating Financial Analysis of Telecom’s accounts by Sue Newberry, Associate Professor of Accountancy at the University of Sydney. That conclusively demonstrates how figures can be massaged and re-titled to present a more flattering picture of reinvestment than is actually the case.

If the taxpayer is going to spend $1.5 billion on providing a service that Telecom can’t or won’t, but from which Telecom will continue to profit handsomely, then the logical conclusion is obviously that the State should take back its former asset so that the New Zealand people can once again fully benefit from what is rightfully ours, and this most strategic of assets (the Government has now prioritised strategic assets) can be operated in the national interest, not that of foreign owners and shareholders.